Investing in Pre-IPO companies offers a rare opportunity to enter high-growth businesses before they go public. However, identifying which startups truly have long-term potential requires more than just looking at valuations or funding rounds.
Two of the most important criteria for pre-IPO analysis are TAM (Total Addressable Market) and Unit Economics; the twin towers define the scalability and sustainability of a business model.
In this blog by Supremus Angel, we break down how these metrics influence investment outcomes and why serious investors must master them before buying Pre-IPO shares.
100% market share in its target sector. For investors in pre-IPO shares, TAM signals the potential of how much bigger the company can become.
This means high potential for expansion. Startups from fintech, EVs, or healthtech sectors often have more potential to attract more investor interest due to scalable markets.
Markets are growing at double-digit CAGR (Compound Annual Growth Rate), signaling structural shifts, for example, digital lending or renewable energy.
Companies often operate in a specific sub-segment (SAM or SOM). Understanding whether they can expand beyond this helps investors assess future revenue visibility.
A realistic TAM assessment helps pre-IPO investors get rid of hype-driven valuations and focus on startups with true market potential. A company with a ₹50,000 crore TAM and 2% achievable share may offer more returns than one with a ₹500 crore TAM and unrealistic growth projections.
While TAM defines opportunity, Unit Economics determines viability. It calculates the profit or loss related to a single unit of product or customer, the foundation of sustainable growth.
Key indicators include:
Customer Acquisition Cost (CAC): The cost to acquire a new customer. A business that expands effectively reduces CAC over time.
Customer Lifetime Value (LTV): The total business expected from one customer throughout their relationship with the company.
Contribution Margin: The difference between revenue per unit and variable cost per unit.
When LTV > 3× CAC, it means it’s a healthy model. If CAC keeps growing and LTV reduces, the company might face trouble post-IPO when funding tightens.
Pre-IPO investors should be focused on improving contribution margins and payback periods, which indicates that a company is transitioning from “growth at all costs” to profitable scalability.
Most unlisted companies attract attention for their brand or valuation, but smart investors look deeper.
Understanding TAM and Unit Economics provides three advantages:
Accurate Valuation Insight: It skips market buzz, and investors can calculate fair entry prices for unlisted shares.
Predicting IPO Readiness: Companies with efficient unit economics and growing TAM have the potential to deliver strong IPO performance.
Risk Mitigation: These metrics indicate whether the business can survive funding slowdowns or margin pressures before listing.
Study Industry Reports: Assess the total and serviceable market for accuracy. Many startups overstate TAM; understanding data sources helps validate assumptions.
Analyze Financial Ratios: Look at CAC trends, gross margins, and burn rates from company filings or investor presentations.
Compare Across Peers: Benchmark unlisted companies against listed sector leaders to estimate efficiency gaps.
Focus on Quality, Not Hype: Choose companies showing path-to-profitability instead of inflated revenue multiples.
In the pre-IPO investment ecosystem, understanding how big a company can grow (TAM) and how efficiently it can grow (Unit Economics) separates serious investors from speculators.
At Supremus Angel, we empower investors to access deep research, insights, and opportunities in India’s unlisted shares market, helping them identify startups with the potential to become tomorrow’s market leaders.
